5 Tips to DRASTICALLY Improve Your Credit Score in 2025

maintaining a good credit score is one of the most important life skills that they don't teach you in school alongside how to do your taxes how to talk to the police I didn't mean to commit a crime I didn't even know that drag racing was illegal but if you maintain a good credit score you will be able to apply for the best credit cards that give generous travel rewards and you will be able to get the best interest rates on any loan product you apply for such as mortgages and car loans which could save you tens of thousands of dollars now FICO has a credit scoring model that includes five factors of credit and in this video I'm going to go through all five and give you tips on how to make each credit Factor work in your favor this is five tips to drastically improve your credit score in 2025 hey credit Warriors my name is Ben Hedges aka the credit shiu and on this channel I cover all things credit and personal finance if you like the sound of that please subscribe but otherwise let's get into it and this video is brought to you by kickoff but more on that later number one maintain low credit utilization so credit utilization which FICO also describes as amounts owed is 30% of how your credit score is worked out it is the amount of your credit lines that you are using and it is expressed as a percentage so if you have $10,000 in available credit on a credit card and the balance that is reported to the credit bureaus at the end of the month is $2,000 then you are at 20% utilization the confusing thing is you have utilization on each of your credit cards and utiliz Iz ation overall across all of your cards both are factored into working out your credit score in my experience maxing out one card can really have a very big effect on your credit score I've done an experiment where I almost maxed out one card I spent $1 4,333 on a card with a $155,000 limit and I let it report to the credit bureaus just maxing out that one credit card dropped my credit score by 60 points now luckily your credit score does bounce back after you pay the balance and the card reports again to the credit bureaus but to avoid this all together if you do need to spend a lot of money one month try to spend it across multiple cards in order to report lower utilization on each one and of course it goes without saying that you should be paying your cards in full each month too but in general try to keep your credit utilization as low as possible you can achieve this by paying your cards off multiple times in one month this may be necessary if you're new to the credit game and you only have cards with very low limits like $500 how low should your utilization be exactly well people often say below 30% but if we look at some data from Experian we can see the average utilization of people in different credit score bands we can see that very low credit scores are associated with high utilization 82% utilization on average for people from 300 to 579 but then if we look at some higher levels people with credit scores over 670 are typically reporting around 35% utilization over 740 14% And people in the 800 club's average credit utilization is only around 6.5% so in other words if you want a really high credit score just keep it as low as possible single digits if you can on each card and in total you can ask for credit limit increases from your card issuers to help keep utilization lower as well number two maintain a perfect payment history so payment history is really crucial this is 35% of how your credit score is worked out the biggest single factor I probably should have talked about this one first actually but anyway you need to maintain a perfect payment history from the point of view of the credit bureaus if you miss a payment by 30 days it gets reported on your credit report and could drop your score by up to a00 points yes by that much but that's only if it's late by 30 days so if you do forget to pay your credit card bill don't despair if it's just a couple of days late immediately pay it and the bank won't report it as a Mis payment since you're still within that 30-day window now you may still get hit with a late fee from your bank but if it's your first time you can usually phone up and get that waved of course the best thing to do is to have autopay for at least the minimum payment on all your cards set up this way you will never get hit with a late fee and you will never have any late payments reported to the credit Bure and with payment history it isn't like utilization where if you pay what you owe it disappears no late payments stay on your credit report for 7 years although the effect they have on your score decreases as time passes and after 2 years the as long as you don't have any more late payments the effect of the late payment should be minimal but if you want no negative impact at all make sure you pay on time and conversely for people new to the game if you have several cards and you're paying them on time each month that can really help build your credit now for those two factors that we just talked about credit building apps are a great way to build your credit and that brings me to the sponsor of today's video kickoff which is an app that provides this service in fact they are the number one credit building app on the App Store basically kickoff does a few things first this app does have a monthly fee there are three plans and the most basic is $5 per month but this is kind of the point because this fee then gets reported to all three credit bureaus as an ontime payment each month in addition to that kickoff also opens a trade line which will show up on your credit report too this trade line is going to be between 750 and $3,500 depending on which plan you are on it increases the amount of credit you have a available and lowers your credit utilization since you're not going to be using this trade line to buy stuff it's just for building credit so right there kickoff has covered the two biggest factors of credit according to FICO payment history which accounts for 35% and amount owed also known as credit utilization which is 30% so that's 65% of the factors affecting your credit being worked on kickoff users with credit under 600 who made ontime payments saw an average increase of 25 points in their first month and 85 points in their first year and having good credit is really important with mortgage rates as skyh high as they are a person at 620 will end up paying $50,000 more in interest on a mortgage of $300,000 than a person at $760 it'll be a similar situation with car loans and any other type of credit product I could have really done with kickoff when I started out on my credit building journey I remember getting denied for the Macy's store card when I was buying my wife's engagement ring because I had no credit history the guy took pity on me and gave me his friends and family discount but anyway I hope your journey can go a lot smoother than mine and kickoff can help they are offering my audience 80% off your first month so that is as little as $1 for month one depending on which plan you choose just go to get kickoff.com sben or click the link below number three keep your average age of accounts as long as possible length of credit history is 15% of how your score is worked out so you may think that this is just a waiting game waiting for years to pass so that your once young credit card and other loan accounts become old and length of credit history starts influencing your score but there are a few things you can do to help this along first don't sabotage yourself by applying for too many new accounts since each time you open a new credit line it shortens your average age of open accounts then secondly you can actually add credit history by being added to a friend or family member's account as an authorized user but not all authorized user cards are created equal I discussed this when I interviewed credit expert Anthony Davenport is it true that some cards don't give the full credit history or do they all give that now AMX for example they'll let you add an authorized user and it will show up on their credit report but only from the date they were added so you don't get the real benefit in history meanwhile like a Capital One card will show you the whole history and it's a great card to be added to so if you get added as an authorized user on a Capital One card you will get the credit history from the moment the primary account holder opened the account that could be years ago imagine you're totally new to credit and suddenly you have an account showing 5 years of ontime payment history showing up on your credit report that's really powerful these are the four banks that Anthony recommends for authorized user cards due to the fact that they report the entire credit history on your credit report all right let's move on to our next Factor number four be careful about applying for new credit so what they call new credit is 10% of how your credit score is worked out basically every time you apply for a new credit product whether that is a credit card a mortgage a car loan or a personal loan whatever it is they will do what's called A Hard pull or a hard credit inquiry this drops your credit score temporarily by up to Five Points so the lesson here is don't apply for too many credit cards at once spread applications out by a few months and let your score recover the good news is that if you are doing what they call rate shopping and looking to get approvals from multiple lenders on mortgages or car loans to see who will give you the best rate FICO will combine hard inquiries for the same type of installment loan product in a 45-day period into a single inquiry this is only the case with installment loans and not with credit cards so don't think that you can apply for a load of credit cards in a 45-day period and it's all just going to be one hard inquiry all right moving on to our final factor of credit number five get a mix of credit types now what they call Credit mix is 10% of how your credit score is worked out credit cards are the most basic credit product that people start out with they easy to apply for low commitment you can cancel any time Etc but if you get a mortgage on your credit report that gives a stability to your credit score that you don't get from having credit cards alone that is because applying for a mortgage is the most thorough Financial audit you can go through believe me I've done it twice car loans are also another type of credit that will help your credit score from a credit mix point of view but obviously don't go applying for a car loan or a mortgage just to improve your credit remember this is just a factor that is 10% of how your score is worked out out it's worth knowing about for when the time comes but not something that you can intentionally do all right guys those are my five tips to get a great credit score in 2025 the most important by far are the first two credit utilization and payment history but the others can help too don't forget you can get 80% off your first month with kickoff at get kickoff.com sben and in the link down below kickoff works on precisely those two credit factors that have most effect on on your credit please subscribe to the channel if you're new we'll see you next time bye-bye